Note 3. Loans

The composition of the loan portfolio by loan classification at September 30, 2015 and December 31, 2014 appears below (dollars in thousands).

	September 30,			December 31,
	2015			2014
Commercial
Commercial and industrial - organic	$	48,041		$	46,125
Commercial and industrial - syndicated		24,027			14,815
Total commercial and industrial		72,068			60,940
Real estate construction and land
Residential construction		1,025			337
Other construction and land		18,108			11,575
Total construction and land		19,133			11,912
Real estate mortgages
1-4 family residential		63,066			60,162
Home equity lines of credit		28,713			25,498
Multifamily		21,170			26,462
Commercial owner occupied		58,678			60,868
Commercial non-owner occupied		90,277			54,012
Total real estate mortgage		261,904			227,002
Consumer
Consumer revolving credit		16,161			3,428
Consumer all other credit		10,308			9,972
Student loans purchased		10,524			-
Total consumer		36,993			13,400

Total loans		390,098			313,254
Less: Allowance for loan losses		(3,513	)		(3,164	)
Net loans	$	386,585		$	310,090

Accounting guidance requires certain disclosures about investments in impaired loans, the allowance for loan losses and interest income recognized on impaired loans. A loan is considered impaired when it is probable that the Company will be unable to collect all principal and interest amounts when due according to the contractual terms of the loan agreement. Factors involved in determining impairment include, but are not limited to, expected future cash flows, financial condition of the borrower, and current economic conditions.

Generally, loans are placed on non-accrual when a loan is specifically determined to be impaired or when principal or interest is delinquent for 90 days or more. Any unpaid interest previously accrued on those loans is reversed from income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Interest income on other non-accrual loans is recognized only to the extent of interest payments received.

Troubled Debt Restructurings (“TDRs”) are considered impaired loans. TDRs occur when the Company agrees to modify the original terms of a loan by granting a concession that it would not otherwise consider due to the deterioration in the financial condition of the borrower. These concessions are done in an attempt to improve the paying capacity of the borrower, and in some cases to avoid foreclosure, and are made with the intent to restore the loan to a performing status once sufficient payment history can be demonstrated. These concessions could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions.

Following is a breakdown by class of the loans classified as impaired loans as of September 30, 2015 and December 31, 2014. These loans are reported at their recorded investment, which is the carrying amount of the loan as reflected on the Company's balance sheet, net of charge-offs and other amounts applied to reduce the net book balance. Average recorded investment in impaired loans is computed using an average of month-end balances for these loans for either the nine months ended September 30, 2015 or the twelve months ended December 31, 2014. Interest income recognized is for the nine months ended September 30, 2015 or the twelve months ended December 31, 2014. (Dollars below reported in thousands.)

September 30, 2015			Unpaid					Average		Interest
	Recorded		Principal			Associated		Recorded		Income
	Investment		Balance			Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Commercial and industrial - organic	$	47	$	65	$		-	$	5	$	-
Other construction and land		62		105			-		65		-
1-4 family residential mortgages		504		528			-		747		19
Commercial non-owner occupied real estate		1,072		1,072			-		1,086		35
Impaired loans with a valuation allowance		-		-			-		-		-
Total impaired loans	$	1,685	$	1,770	$		-	$	1,903	$	54

December 31, 2014			Unpaid					Average		Interest
	Recorded		Principal			Associated		Recorded		Income
	Investment		Balance			Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Other construction and land	$	69	$	109	$		-	$	79	$	1
1-4 family residential mortgages		525		545			-		437		16
Home equity lines of credits		-		-			-		50		3
Commercial owner occupied real estate		1,103		1,103			-		1,124		60
Commercial non-owner occupied real estate		-		-			-		46		-
Impaired loans with a valuation allowance		-		-			-		-		-
Total impaired loans	$	1,697	$	1,757	$		-	$	1,736	$	80

Non-accrual loans are shown below by class (dollars in thousands):

	September 30, 2015		December 31, 2014
Commercial and industrial - organic	$	47	$	-
Other construction and land		62		69
1-4 family residential mortgages		136		149
Total nonaccrual loans	$	245	$	218

The following provides a summary, by class, of TDRs that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and TDRs that have been placed in non-accrual status, which are considered to be nonperforming (dollars in thousands).

Troubled debt restructuring (TDRs)	September 30, 2015			December 31, 2014
	No. of	Recorded		No. of	Recorded
	Loans	Investment		Loans	Investment
Performing TDRs
1-4 family residential mortgages	2	$	368	2	$	376
Commercial non-owner occupied real estate	1		1,072	1		1,103
Total performing TDRs	3	$	1,440	3	$	1,479

Nonperforming TDRs
Other construction and land	1	$	36	1	$	39
Total TDRs	4	$	1,476	4	$	1,518

None of the TDRs reported above were modified under the terms of a TDR during the nine months ended September 30, 2015 and 2014. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reportable. Additionally, there were no loans modified as TDRs that subsequently defaulted during the nine months ended September 30, 2015 and 2014 that were modified as TDRs during the twelve months prior to default.

There were no loans secured by 1-4 family residential property that were in the process of foreclosure at either September 30, 2015 or December 31, 2014. The one property that had previously been transferred to Other Real Estate Owned consisted of a 1-4 family residential property and was reported net of valuation allowance at $540 thousand at September 30, 2015 and $1.177 million at December 31, 2014. A portion of the property was sold during the second quarter of 2015 accounting for $445 thousand of the decrease in the amount carried. The remaining difference was due to a writedown of $192 thousand in the third quarter of 2015.